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A 30-year maturity bond making annual coupon payments with a coupon rate of 15.5% has duration of 10.58 years and convexity of 162.6. The
A 30-year maturity bond making annual coupon payments with a coupon rate of 15.5% has duration of 10.58 years and convexity of 162.6. The bond currently sells at a yield to maturity of 9%. Required: a. Find the price of the bond if its yield to maturity falls to 8%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of the bond $ 1,844.33 b. What price would be predicted by the duration rule, if its yield to maturity falls to 8%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price c. What price would be predicted by the duration-with-convexity rule, if its yield to maturity falls to 8% ? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price
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